The issue of monetizing a website (through ads, or in Neatorama's case both ads and e-commerce*) is something I continually think about. As many of you know, the blog started out with no ads whatsoever and throughout its growth (thanks, Neatoramanauts!) we've added text and banner ads to keep up with the hosting and bandwidth bills**.

So I really wasn't surprised to hear the news that SilkTricky, a Portland interactive studio behind the web hit The Outbreak (posted on Neatorama before here), had to shut down the popular website because of hosting bills.

Todd Denis of Jawbone.TV interviewed Lynn Lund of SilkTricky about the decision to pull the plug:

Put aside for a moment the internal costs that a boutique design studio or maddened creator racks up in producing original production of a consumable magnitude (for the Outbreak, figure three months full-time for the writer/director/producer team, plus a system admin, a Flash guy, and hard costs for actors, props, equipment, etc., and it’s easily into the hundreds of thousands of dollars). The real killer, as endless lines of bankrupt indie filmmakers will attest, is ‘out-of-pocket’ expenses.

“We've been spending anywhere from $500 per month to $4,500 per month, depending on the traffic,” claimed Lynn Lund, Producer at SilkTricky. “As you can imagine, it adds up. We've spent about $20,000 in hosting alone since we launched in September [2008]. Since we funded this project out of our own pockets, it's been tough to keep the site afloat.” [...]

For Lund, the equation was simple. “With the economy as it is and no means to monetize what we did with the Outbreak, we had to find a way to save some money so that we could put it towards a new project … we had to pull the plug.”

*Undoubtedly, many bloggers are familiar with instability of ad revenues for publishers, which forced some to be creative. Om Malik of the excellent tech blog Giga Om started a subscription-based Giga Om Pro, which features exclusive in-depth content geared toward IT professionals. We opted to open an ad-independent stream of revenue, the Neatorama Online Store.

**I've had many conversations with bloggers who don't understand why it's so expensive to run a large blog. After all, they could run theirs for a few dollars a month. Indeed, that's how this blog started, but as traffic grew, we got kicked out of our shared hosting plan, and had to upgrade to VPS, then a dedicated server, then multiple servers in a load-balanced environment with content delivery network to serve images. As you can imagine, the cost of hosting and bandwidth increase very rapidly. The cost of running this blog runs into the five figures every year, and growing.

Flickr is not the best option for hosting images. First, the conditions forbit linking the images outside Flickr if they're not linked to the Flickr account. Second, there is a bandwith limit even on paid accounts that a site like Neatorama would reach in no time.

Amazon S3 or some similar service would be a better option in this case.

Bandwidth and CPU usage are two different things - blog engines like Wordpress are CPU hogs (especially if you use a lot of plugins) so I'm familiar with Carl's dilemma of running out of one's allotment of CPU cycles before you even come close to running out of bandwidth.

I'm facing a very VERY similar problem. My site is not *huge* in traffic, but the lie of "unlimited bandwidth" does not include "unlimited CPU usage". Consequently, my $5/mo host wants me to upgrade to a $99/mo plan. This is ridiculous.

For what it's worth, the host is Lunarpages. Do not use them if you expect profitable success in any way.